Correlation Between Harvest Healthcare and First Trust
Can any of the company-specific risk be diversified away by investing in both Harvest Healthcare and First Trust at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Harvest Healthcare and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harvest Healthcare Leaders and First Trust Indxx, you can compare the effects of market volatilities on Harvest Healthcare and First Trust and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Harvest Healthcare with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harvest Healthcare and First Trust.
Diversification Opportunities for Harvest Healthcare and First Trust
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Harvest and First is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Healthcare Leaders and First Trust Indxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Indxx and Harvest Healthcare is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Harvest Healthcare Leaders are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Indxx has no effect on the direction of Harvest Healthcare i.e., Harvest Healthcare and First Trust go up and down completely randomly.
Pair Corralation between Harvest Healthcare and First Trust
Assuming the 90 days trading horizon Harvest Healthcare is expected to generate 1.65 times less return on investment than First Trust. In addition to that, Harvest Healthcare is 1.08 times more volatile than First Trust Indxx. It trades about 0.08 of its total potential returns per unit of risk. First Trust Indxx is currently generating about 0.14 per unit of volatility. If you would invest 949.00 in First Trust Indxx on August 29, 2024 and sell it today you would earn a total of 204.00 from holding First Trust Indxx or generate 21.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harvest Healthcare Leaders vs. First Trust Indxx
Performance |
| Timeline |
| Harvest Healthcare |
| First Trust Indxx |
Harvest Healthcare and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harvest Healthcare and First Trust
The main advantage of trading using opposite Harvest Healthcare and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harvest Healthcare position performs unexpectedly, First Trust can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Trust will offset losses from the drop in First Trust's long position.| Harvest Healthcare vs. BMO Covered Call | Harvest Healthcare vs. First Asset Tech | Harvest Healthcare vs. Harvest Equal Weight | Harvest Healthcare vs. First Asset Energy |
| First Trust vs. First Trust Indxx | First Trust vs. First Trust Senior | First Trust vs. First Trust AlphaDEX | First Trust vs. First Trust Indxx |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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